It might sound extraordinary, but a legal dispute over merchandise associated with The Wizard of Oz, Gone With the Wind and Tom and Jerry has been raging for more than a decade. On Tuesday, the 8th Circuit Court of Appeals revisited the dispute by affirming both a $2.57 million judgment and permanent injunction in favor of Warner Bros.
AVELA, Dave Grossman Creations, X One X Productions and Leo Valencia became the defendants in the lawsuit after they acquired restored versions of movie posters and lobby cards, extracted images of famous movie and cartoon characters and put them on shirts, lunch boxes, music box lids, playing cards and more.
When Warner Bros. sued for infringement of its intellectual property, the defendants asserted the publicity materials were distributed without copyright notices, and pointing to old law, argued these materials were therefore injected into the public domain. Thus, the defendants suggested, there was nothing improper with selling an image of, say, Rhett Butler next to his famous Gone With the Wind line, "Frankly, my dear, I don't give a damn."
In 2011, the 8th Circuit rejected this logic, writing at the time that "the scope of the film copyrights covers all visual depictions of the film characters at issue, except for any aspects of the characters that were injected into the public domain by the publicity materials."
In other words, the only thing that the defendants had freedom to do was to recreate nearly identical copies of the movie posters and lobby cards. To juxtapose images extracted from the publicity materials with phrases from the film or to create images in three dimensions went over the line as far as the federal appeals court was concerned.
The fight didn't end there.
The case then went back to a Missouri district court, which awarded statutory damages in the amount of $10,000 for each of the 257 copyrights at issue. Additionally, the judge issued an injunction prohibiting AVELA from licensing any images or phrases from the films or cartoons, with the exception of exact reproductions of publicity materials in the public domain.
On Tuesday, 8th Circuit judge Raymond Gruender writes the sequel.
Gruender rejects the argument that the statutory damages award violated AVELA's Seventh Amendment due process rights by not submitting the question of damages to a jury. He decides that such a claim wasn't properly before the appeals court because AVELA failed to make jury demands throughout the litigation. The appellate judge also decides that the $2.57 million isn't disproportionate to the offense, finding rationality in the lower court's attempt to deter future infringement and provide sufficient restitution.
The latest appeal also dealt with the issue of trademarks.
At one point, Warner Bros. told the district court that if summary judgment on the copyright claim was granted, it wouldn't need to pursue other claims. (Copyright protect works of authorship while trademark protects the sourcing of goods and services.) Greunder rejects AVELA's contention that this amounted to a judicial admission that estopped the film studio from proceeding on the trademark claim.
Perhaps the most interesting portion of Tuesday's decision deals with AVELA's attempt to use Dastar to foreclose the claim that its Wizard of Oz merchandise was confusing origin and sponsorship. Dastar refers to the Supreme Court's landmark 2003 decision that essentially holds trademarks can't be used as perpetual swords to counter copyrighted work falling into the public domain.
Yes, there's some public domain material involved here, but it doesn't save AVELA's merchandising.
"Warner's asserted trademarks in the characters from the films and cartoons do not run afoul of Dastar," writes Greunder. "The district court found and AVELA did not dispute that Warner holds registered trademarks in iconic phrases and names from the films and has used the character images for trademark purposes on a host of consumer goods for many years. Images of the film actors in character and signature phrases from the films are not communications, concepts, or ideas that the consumer goods embody as Dastar defines these terms. Products marketed under AVELA's licenses employ iconic film characters' pictures to associate the products with Warner's films, not to copy the film itself. Accordingly, these are trademark claims, not disguised copyright claims, and Dastar does not bar them."
The 8th Circuit then goes on to affirm a finding of the likelihood of confusion among consumers, opining that actual confusion is not essential, before blessing the permanent injunction. Although AVELA contended that Warner Bros. didn't show a threat of irreparable harm, Greunder retorts "a finding that likelihood of confusion exists results in a presumption that a threat of irreparable harm exists."